Willie Walsh lobbies yet again … regular as clockwork … for cuts in APD … Autumn Budget Statement is on 3rd December

Date added: October 30, 2014

Every year before the Budget in the spring, and the Autumn Budget Statement, the aviation industry has go at trying to get Air Passenger Duty reduced. APD is charged on air travel, in order to partly make up for the fact that aviation pays no VAT and no fuel duty. The industry therefore gets a large annual tax subsidy. However, the airlines would like it cut, in order to sell more flights – many of which are taking Brits out of the UK to spend their holiday money abroad. But that does not stop Willie Walsh proclaiming that APD is “out of control” and saying there have been “relentless rises” in the tax. That is nonsense. APD has risen from £12 to £13 for any flight to Europe (Band A), over the past 5 years or so. The rate for flights in Band B (2,000 to 4,000 miles) has risen from £120 in 2011, to £138 now, and will rise to £142 in April 2015. That is an 18% rise in 4 years. Willie says, in blatant self interest for airline profits, that “APD has snowballed out of control” (what ??) and outrageously that scrapping APD “would boost Britain’s economic growth by 0.5% within a year and lead to the creation of 60,000 new jobs.” In reality, in the March 2014 Budget, the Chancellor cut the rate of APD on trips of over 4,000 miles, to only be £142, which means a net loss to the taxpayer of £215 million in 2015. .Tweet

Air Passenger Duty

British Airways slams ‘out of control’ APD

By Tom Newcombe (Buying Business Travel)

29 Oct 2014

British Airways has criticised the UK’s high-level of APD and called for its abolition to boost the economy.

The airline said the “relentless rises” in the tax, which is 20 years old this week, means that a family of four flying to a destination outside Europe will soon pay £284 in tax, compared to £40 when the tax was introduced.

According to BA figures, annual treasury revenue from APD is now nearly 10 times as much as in the tax’s first full year. The airline also claimed that UK passengers have paid more than £26 billion in APD since 1994.

Willie Walsh, CEO of BA’s parent company IAG, said: “Twenty years on, APD has snowballed out of control and become a tax that works against people wanting to visit relatives and friends, go on holiday or grow their business to create jobs.

“APD is way out of line with both other indirect taxes in the UK and flight taxes in other countries. Globalisation has accelerated enormously in the last 20 years. This tax helps no-one in today’s economic environment. We must call time on APD.”

BA said that the scrapping of APD would boost Britain’s economic growth by 0.5 per cent within a year and lead to the creation of 60,000 new jobs without reducing the treasury’s net revenues.

Aberdeen, Edinburgh and Glasgow airports have today made a joint submission to the Smith Commission, calling for Air Passenger Duty (APD) to be devolved to the Scottish parliament.

It is expected that if the Scottish government gained control of setting APD it would eventually lead to the scrapping of the tax entirely in Scotland.

Treasury Minister confirms APD is necessary and government has no plans to reduce it

27.10.2013

On 23rd October there was an “Opposition day debate” in the Commons, on Air Passenger Duty -especially in relation to Northern Ireland. There were attempts by some MPs with no interest in environmental concerns, to make out that APD is a “green tax”, (and so, along with other “green taxes” should be cut, in the misjudged belief that would benefit the UK economy. The new Economic Secretary to the Treasury, Nicky Morgan, replied for the government, that “we must continue to work hard to reduce the deficit, so if we were to abolish APD, an alternative source for the revenue would need to be found. We never seem to hear any suggestions,” and “….the £3 billion that is raised by APD is a significant contribution to the Exchequer when we are tackling the deficit.” And “There is also no duty charged on the fuel used in international, and virtually all domestic, flights. …..despite the fiscal challenges, the Government have ensured that APD rates have been frozen in real terms since 2010, rising by just £1 for the vast majority of passengers since then. The Government therefore reject the suggestion that we have pushed taxes on aviation too high.”

APD rate on business jets to rise from x4 standard up to x6 by April 2015, while Treasury receipts from APD fall by £250 million by 2019

March 20, 2014

The changes to APD in the budget include 3 components; for the next 2 years the rates of APD for Band A (up to 2,000 miles) at £13 and Band B (2,000 to 4,000 miles from London) at £67 continue to rise at the rate of RPI; after April 2015 APD for distances further than 4,000 miles will be at the Band B rate of just £71; and private jets will after April 2015 pay APD at 6 times the rate for standard passengers, up from 4 times the rate in 2014 (and 2 times the rate in 2013). There were some 228 million UK air passengers in 2013, of whom some 120 million were to Europe, some 69 million were to longer haul destinations, and some 38 million were domestic. Of the long haul passengers, some 20 million were to Band C and D destinations (4,000 to 6,000 miles from London, and over 6,000 miles respectively). The Treasury estimates that the revenue generated by Air Passenger Duty will be some £3.0 billion in 2013-14,rising to £3.9 billion in 2018-19. Earlier estimates put the revenue as £4.3 billion in 2018-9. The removal of Bands C and D in 2015 is expected to reduce receipts by the Treasury by £0.2 billion a year on average from 2015-16. They anticipate £215 million less in 2015-6 rising to £250 million less in 2018-9. But they anticipate the losses will be this low due to growth in the number of air passengers

Chancellor cuts rate of Air Passenger Duty for long haul (over 4,000 miles) flights from 1st April 2015

March 19, 2014

In the Budget 2014 the Chancellor has announced that rates of Air Passenger Duty (APD) are to be reduced for flights of over 4000 miles from London, from April 2015. Rates of APD will rise by the rate of inflation (RPI) during 2014. After 1st April 2015, distance bands for all journeys longer than 2,000 miles will all be lumped together. While the rate of APD during 2014 (from 1st April 2014) is £13 for a return trip below 2,000 miles (anywhere in Europe), and the rate for journeys of 2,000 to 4,000 miles in length is £69 – the rates from April 2015 will be £13 for the short flights, and £71 for all other distances. The rates of APD in 2015 for premium classes will be £26 and £142. Commenting on this retrograde move by the Chancellor, the Aviation Environment Foundation said it is a backward step environmentally and economically. Aviation is already massively under-taxed compared with the £10 billion that would be raised per annum if aviation wasn’t exempted from fuel taxes and VAT. APD was a means of redressing this problem but any cut means that taxes will have to be raised elsewhere to balance government spending. Long-haul flights contribute more greenhouse gases in absolute terms than shorter flights. It is therefore right that the duty is proportional to the distance flown and the associated emissions. Eliminating bands C and D breaks the link between environmental impacts and tax and breaches the principle of fairness.

Some 250 CEOs write to Chancellor (yet again) to try and stop APD rises in line with RPI due in 2014

December 1, 2013

Regularly, every few months, there is another push by the aviation industry and its supporters, to get Air Passenger Duty (APD) reduced or scrapped. There is an other of these lobbying events again now. Some 250 chief executives have written to the Chancellor, accusing the Treasury of “ignoring evidence that APD is harming the economy.” The UK has one of the highest aviation tax regimes in the world. Most other countries barely tax aviation. Several others in Europe do tax in one way or another. The reason the tax is charged is that UK air travel pays no VAT and no fuel duty. APD is intended to reduce this massive tax break, and in some way and incompletely, put a fair amount of tax onto air travel. The aviation and business lobby ignore this, and claim APD has a substantial negative effect on the UK economy. They ignore the need for fair taxation, and the Treasury’s need for revenue. The businesses say: ….we are bitterly disappointed with the Government’s decision to keep increasing a tax which acts as a barrier for business in attracting inward investment and creating new jobs.” They quote a study earlier in the year by PwC on which the Treasury commented: “We do not recognise the figures in this report or agree with the assumptions behind it.” Click here to view full story…

German study: air travel taxes are an important instrument for climate protection

December 2, 2013

A study in Germany has been commissioned by a range of development and environmental organisations, into the effects of taxing aviation. It found that charging some taxes to air travel does not lead to movement of passengers from German airports to use foreign airports or to job losses in the aviation business – which is what he Federation of German aviation industry claims, probably incorrectly. The report says that additional revenue should be generated from air travel, to help fund mitigation and adaptation to climate change in developing countries. The organisations are calling on the coalition government in Germany to keep, and increase, air travel tax. The tax started in January 2011, and is charged based on distance travelled with rates of €7.56, €23.62, or €42.52 for short, medium and long haul flights. In Germany, as in the UK and in most of Europe, jet fuel is exempted from the energy tax on international flights and VAT is not charged. This tax break amounts annually to about €10.4 billion euros lost to the German tax authorities, which is massively more than the approximately €1 billion from air travel tax currently paid. The report wants to see taxation incentivise the most efficient utilization of planes. Click here to view full story…

Treasury Minister confirms APD is necessary and government has no plans to reduce it

27.10.2013

On 23rd October there was an “Opposition day debate” in the Commons, on Air Passenger Duty -especially in relation to Northern Ireland. There were attempts by some MPs with no interest in environmental concerns, to make out that APD is a “green tax”, (and so, along with other “green taxes” should be cut, in the misjudged belief that would benefit the UK economy. The new Economic Secretary to the Treasury, Nicky Morgan, replied for the government, that “we must continue to work hard to reduce the deficit, so if we were to abolish APD, an alternative source for the revenue would need to be found. We never seem to hear any suggestions,” and “….the £3 billion that is raised by APD is a significant contribution to the Exchequer when we are tackling the deficit.” And “There is also no duty charged on the fuel used in international, and virtually all domestic, flights. …..despite the fiscal challenges, the Government have ensured that APD rates have been frozen in real terms since 2010, rising by just £1 for the vast majority of passengers since then. The Government therefore reject the suggestion that we have pushed taxes on aviation too high.”

Anti-APD campaign wastes no time in lobbying new shadow minister, Lilian Greenwood

September 10, 2013

After the resignation of Jim FitzPatrick as a Labour opposition transport spokesman on 29th August over Syria, his shadow aviation responsibilities have been taken over by Lilian Greenwood (MP for Nottingham South). The aviation industry has lost no time in lobbying her on Air Passenger Duty. British Air Transport Association (BATA) say her new role “offers an ideal opportunity for the opposition to put pressure on the government between now and the next election to review the impact of APD on the UK economy.” While APD does no harm the UK economy, it has a very slight impact on demand for air tickets (it is only £13 for a return flight to anywhere in Europe), so the aviation industry is deeply opposed. All the lobbying ignores the fact that the Treasury charges APD because air travel pays no VAT and aviation does not pay fuel duty. People on internal return flights within the UK pay £26 in APD as each part of the trip is charged. Scotland has long lobbied to get APD devolved to the Scottish Government, with businesses campaigning to get APD removed.https://www.airportwatch.org.uk/?p=17294

Report shows EU governments miss out on up to €39bn a year due to aviation’s tax breaks (no VAT or fuel duty)

July 30, 2013 . A report has been produced, by consultants CE Delft, for the sustainable transport group, Transport & Environment (T&E). It shows that debt-ridden EU countries miss out on up to €39bn every year from airlines not paying taxes. CE Delft found that this revenue shortfall is due to out-dated EU laws exempting international flights from fuel taxes, and from VAT, which is levied on almost all consumer goods. While every European consumer, small business and haulier has to pay on average a tax of €0.48 / litre of fuel for petrol or diesel, big commercial airlines – both those based in the EU and overseas – don’t pay any tax on their fuel. This revenue shortfall totals up to €32bn a year. In addition to this EU governments miss out on €7.1bn every year on VAT which is exempt on international flight tickets. T&E’s aviation policy officer Aoife O’Leary said: “International airlines are like flying tax havens inexplicably exempted from paying the basic EU taxes every EU citizen and company is obliged to pay.” However the airline industry says that without such tax holidays it would be hard pressed to turn a profit. (So much fuel used. So much CO2 generated. So little profit.) The EU consultation on state aid to airports & airlines closes 25th September.https://www.airportwatch.org.uk/?p=3975